Radiology Practice Consolidation and the New World of Value-Based Healthcare

April 5, 2019
Radiologists are having to change how they work, on every level—clinical, operational, financial—in order to adjust to the demands of the increasingly value-based healthcare payment and delivery system

The entire world of radiology practice is changing quickly now, as are all the other worlds in U.S. healthcare, as everything is being driven by broad policy, payment, and business trends. And one foundational way it’s changing is being reflected in the accelerating consolidation of radiology practices.

A team of researchers (Andrew B. Rosenkrantz, M.D., Howard B. Fleishon, M.D., Ezequiel Silva III, M.D., Claire E. Bender, M.D., and Richard Duszak Jr., M.D.) documented the consolidation in an article in the February issue of the Journal of the American College of Radiology (JACR). In the article, entitled “Radiology Practice Consolidation: Fewer but Bigger Groups Over Time,” the researchers found an acceleration in radiology practice consolidation.

In preparing their study, “Radiologist practice characteristics were obtained from the Medicare Physician Compare database for 2014 and 2018. Radiologists were classified on the basis of their largest identifiable practice affiliations,” the article’s authors noted. “Single-specialty radiology practices were identified using practice names. Temporal trends in practice sizes were assessed.”

And what did the researchers find? “At the individual radiologist level from 2014 to 2018, the fraction of all radiologists in groups with 1 or 2 members declined from 3.2 percent to 2.1 percent, 3 to 9 members from 10.2 percent to 6.7 percent, 10 to 24 members from 18.2 percent to 14.1 percent, 25 to 49 members from 16.6 percent to 15.1 percent, and 50 to 99 members from 13.3 percent to 11.5 percent. In contrast, the fraction in groups with 100 to 499 members increased from 15.7 percent to 21.8 percent and with 500 members or more, from 22.9 percent to 28.7 percent. At the practice level, the fraction of all radiologists’ practices with 1 or 2 members decreased from 26.9 percent to 22.8 percent, whereas the fraction with 100 to 499 members increased from 7.6 percent to 10.2 percent and with 500 members or more from 2.5 percent to 4.1 percent.”

Meanwhile, the researchers found, “Similar shifts were present for single-specialty radiology practices and all geographic regions nationally. The 30,492 radiologists identified in 2014 were affiliated with 4,908 group practices, including 2,812 single-specialty practices. In comparison, the 32,096 radiologists identified in 2018 were affiliated with 4,193 group practices (a 14.6 percent decline), including 2,216 single-specialty practices (a 21.2 percent decline).”

"As large groups increase in attractiveness for new physicians, remaining smaller practices in rural or other underserved areas may have difficulty in recruiting new members, which may be particularly problematic for ensuring access to interventional radiologists and other radiology subspecialists," the researchers wrote.

All of these factors are certainly contributing to a major shift these days. In an article published last year in Radiology Business online, Dave Pearson noted that, in 2018, “Seven bellwether radiology practices completed merger and acquisition deals in the 18 months leading up to July, according to the investment bank Coker Capital Advisers. A handful of others were in talks as of that same month, and, according to another investment bank, Provident Healthcare Partners, the movement is propelled by such business-not-as-usual factors as market fragmentation, hospital consolidation, increasing demand for radiology services, value-based payment models and the march of machine learning. Each of these factors is a source of disruption all its own, but the fact that their cumulative effect is to push practices to consolidate makes a case for consolidation itself as Disrupter No. 1.”

And, writing on July 13, 2018 in Forbes online, Deborah Balshem noted that “Radiology practices, like other physician specialty groups, are picking up their M&A [merger and acquisition] pace, driven partly by increasing demands from hospitals and doctor group clients to provide cheaper outsourced services, according to multiple sector advisers. There has been “massive consolidation” among radiology groups, with seven of the top 20 radiology practices in the country completing a deal within the last 18 months, according to McNeill Wester, a managing director at investment bank Coker Capital Advisers.”

What’s behind all this activity? Balshem wrote that “A fragmented market, changing reimbursement models, hospital consolidation, increasing demand for services and coverage by health systems, and advancing technology in areas such as artificial intelligence are all contributing to M&A activity,” according to Steven Aguiar, a managing director at investment bank Provident Healthcare Partners. “Radiology groups have joined many other kinds of specialty practices, such as anesthesiologists, physical therapy, dermatology and others that have gone through similar consolidation in recent years for reasons including economies of scale, cutting overhead costs, appealing to hospitals and payers, and to access more funds for technology,” Balshem added.

Inevitably, radiologists are finding themselves practicing in very different clinical and operational environments than before. Clinical management oversight of their decision-making and work are intensifying, aided by the emergence of artificial intelligence and machine learning tools, as well as policy and payment changes that are constricting their room for maneuver as clinicians. Thus, as the researchers writing in JACR noted, radiologists’ practice environment involves pressure from payers to improve service quality, control costs, and coordinate care, that had never existed until recently.

Not surprisingly, radiology, as a specialty, is having to adjust to rapidly changing norms and practice conditions. At the same time that radiologists are being pressured as never before to rush out findings and reports within hours, they are also finding that competition from remote-read services in India and even from within the United States, as well as demands by public and payers to bring down radiological charges and costs, as well as demands for them to participate in clinical and resource-utilization peer review, are making them more vulnerable than ever before.

Inevitably, healthcare IT leaders will be increasingly involved in trying to help optimize practice conditions for radiologists, to the extent that they can. Not surprisingly, the JACR researchers noted that, “In very recent years, the US radiologist workforce has consolidated, leading to increased practice sizes and a substantial decline in the number of distinct practices, disproportionately affecting single-specialty radiology practices. The impact of this consolidation on cost, quality, and patient access merits further attention.” Most of all, radiologists themselves will need to play an active part in making this emerging new world work for them—whether they practice in large, medium, or small sized groups—and whoever their direct bosses are—because the world is never going to change back to the old, totally fee-for-service-dominated one in which they had happily practiced for decades.

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